Global Digital Currency Regulatory Roundup: February 2015

Exploring and revising digital currency legislation were the key trends in February. A number of state and federal governments continued to do their due diligence with hopes of identifying the best way to regulate bitcoin usage and digital currency companies.

North America

New York: Revised BitLicense Proposal

The New York Department of Financial Services (DFS) introduced its revised proposal for the BitLicense legislation. Several changes were made following the last round of comments on the previous iteration of the proposed legislation, including but not limited to the following: Companies that use digital currencies for non-financial purposes, such as miners and technology firms, will no longer be required to register for a license. The two-year conditional BitLicenses that will be available to startups and small businesses will now be eligible for renewal if a company continues to meet the operating criteria. The proposal also includes a requirement that firms report suspicious transactions to the DFS.

Changing Requirements: The requirements that licensees report addresses and other data from all transactions have been removed. These firms will only be require to record information from their own customers. The licensees must also disclose the risks of digital currencies to their customers.

New Jersey: Exploring Regulation

Earlier this month, New Jersey lawmakers held a panel on bitcoin with nine business owners and legal experts to discuss the potential approaches to regulating digital currencies. Legislators asked the panel, which included itBit CEO Charles Cascarilla, about the advantages and risks of bitcoin and about how other states have approached the technology thus far. Marco Santori, global policy counsel for Blockchain.Info, outlined the main approaches that other states have taken in digital currency regulatory guidance and suggested a new approach for New Jersey, one that considers new legislation that would incentivize digital currency businesses to base themselves in the state, balanced with assurances that these businesses will be monitored in how they manage money.

Clarity Above All: Regulatory clarity seemed to be important to all panel members. Coin Center’s Jerry Brito, for instance, strongly urged clarification in how existing regulations apply to bitcoin, as well as encouraging an eye toward innovation in future legislation.

Vermont: Shuts Down Lone Bitcoin ATM

Vermont Department of Financial Regulation Commissioner Susan Donegan spoke with CoinDesk following the controversial decision this month to shut down Vermont’s only operating bitcoin ATM. Donegan claimed the issue was that the company operating the machine was not licensed in Vermont. Title 8, Chapter 79 of the Vermont Statutes, which deals with money services, references “monetary value evidenced by digital record,” which the state believes applies to bitcoin and other digital currencies. Donegan believes bitcoin falls under the definition of monetary value, even if it is neither currency nor money.

Face-To-Face Contact: Under the existing legislation, digital currency businesses must meet with the state to discuss their business plan before getting licensed.

Canada: New Digital Currency Regulations in Quebec

Québec has enacted new regulations governing digital currency in the province. As of this month, any business operating either a bitcoin ATM machine or a platform by which digital currency is traded must obtain a license issued by theAutorité des Marchés Financiers(the “AMF”).

Existing Regulations Evolving: The AMF has modified the policy statement of its previously existing Money-Services Businesses Act of 2012, which regulates people and entities who operate any money-services businesses in Québec.

Europe

Spain: Proposal for Bitcoin Regulation

Unión Progreso y Democracia, a social liberal political party in Spain, submitted a proposal for bitcoin legislation to the Spanish Congress in January. The submittal outlined the risks inherent in digital currencies and outlined the importance the party believes regulation will have upon improving security and preventing fraudulent and criminal activity.

Slow But Steady Progress: The Spanish government had ruled back in September 2014 that bitcoin and other digital currencies should be treated as electronic payment systems.

Italy: Bitcoin Intermediaries Asked to be Cautious

The Financial Intelligence Unit (FIU) of Italy’s Central Bank issued a public statement on February 2, stating that since those dealing with and in digital currencies are not subject to money laundering legislation in the country, those intermediaries dealing with bitcoin and other digital currencies should exercise prudence and evaluate such transactions carefully, reporting any suspicious transactions to the FIU whenever possible.

High Levels of Responsibility: The FIU stressed that it is the responsibility of those required to report suspicious transactions to raise awareness among those staff members responsible for the evaluation of suspicious transactions, and to develop appropriate means of evaluation.

Isle of Man: Law Amended to Address Digital Currencies

Brian Donegan, the Isle of Man’s head of operations for digital development and e-business, told CoinDesk that the 2008 Proceeds of Crime Act is in the process of being amended to address bitcoin and other digital currencies. The proposal will be put in front of the island’s parliament for approval at some point later this year.

Hurry Up and Wait: It was first reported back in July 2014 that the Isle of Man government was in the process of attempting to address concerns with the effects of digital currencies on existing regulations. It appears the island is now close to achieving some semblance of regulation in this area.

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